1. Field of the Invention
The present invention relates to managing supply chain, inventory, and out-of-stock conditions for retail products. The present invention also relates to radio frequency identification systems and methods for tracking retail products.
2. Background
Maintaining a properly-stocked retail store is challenging to retailers, manufacturers, and others within a supply chain. A properly-stocked retail store optimizes sales for retailers and manufactures, and meets expectations of consumers. There are several challenges to maintain product properly stocked on regular shelf locations. High turn over products need to be monitored constantly because such products can quickly sell-through or sell-out. Low and moderate turn over items may not be monitored sufficiently to detect out-of-stock conditions. Stocking compliance by retailers is a challenge. It is difficult to identify products which are misplaced or lost in a backroom of a retail store. If a manufacturer presumed such misplaced products to be on a shelf, then such an erroneous presumption may result in lower sales and cause a manufacturer to decrease sales forecasts and the amount of product shipped to a store. This can create a negative feedback supply cycle that can damage or ruin a product line. Other challenges arise from new product introductions and modified or reorganized shelf locations.
Product stocking events for promotional items and displays have additional challenges. Manufacturers and suppliers of consumer packaged goods (CPG) use promotional events to increase sales of goods at retail stores. Visibility is a key to such trade promotions. Displaying goods as end caps of aisles, in action alleys, or in other high-traffic areas dramatically increases sales of goods. A display-based promotion of goods can increase sales by 500% or more. Valuable display areas within a retail store are often leased to CPG manufacturers.
Spending on promotions of goods is substantial. CPG manufacturers spend over $75 billion per year on trade promotions, yet less than 30% of their programs are profitable. In spite of a need to improve management of trade promotions, the vast majority of CPG companies still does not capture or measure promotion results.
It is common for manufacturers to create and ship entire displays to be positioned in action alleys and other high-visibility or high-traffic areas. Retailers have the responsibility to receive and position these displays on sales floors in correct locations and at correct times.
One challenge associated with such promotional displays of goods, is compliance by retailers. Manufacturers create displays and designate where and when a display is to be placed, i.e. moved to the sales floor, but manufacturers rely on retailers to properly execute and monitor for when a promotional display goes out-of-stock. With retailers selling and managing hundreds and thousands of different items, it is difficult to ensure that promotional displays are moved to the sales floor at designated times. With some promotional events, it is typical for over half of participating retail stores to be late moving promotional displays to sales floor.
In addition to late execution of displays, incorrect placement of displays can reduce sales. In large retail stores, a given manufacturer may have multiple promotional displays scheduled to be moved to specific zones or areas on a sales floor. The specific physical display location may be predetermined based on the type of goods or by agreement with a retailer. For example, a manufacturer may pay more for using display space in a higher-traffic area, but during execution a sales associate may move this manufacturer's display to a lower-traffic area. With incorrectly placed displays, a manufacturer is overpaying for space and losing sales.
Early display execution is also a problem for suppliers and retailers. Some retailers may move a received display to the sales floor from a few days to a couple of weeks before the scheduled launch date causing display products to sell-out or sell-through before the intended launch date.
Poor promotional display execution damages the reputation of retailers and manufacturers. Promotional displays are often tied to television, radio, Internet, print, or other advertising campaigns. Manufacturers do not meet a shoppers expectations with late or incorrectly placed displays, or displays that are out-of-stock. It is important to have promotional goods placed when and where a shopper expects.
During pre-promotion, tracking of store-level promotion execution is limited and difficult. Manufacturers can track execution by visiting retail stores, or repeatedly communicating with managers of individual stores, but such activities become time consuming and expensive. It is also difficult to determine which stores have not received promotional displays before the start of a corresponding promotional event.
During promotions, manufacturers are limited to tracking aggregate point-of-sale data. There is substantial latency in receiving point-of-sale data. If this sales data is within a specified range, the manufacturer has no specific basis for being alarmed. After a promotional event, there is no execution data to support increases in sales forecasts for future promotions and to defend poor sell-through of promotional products. There is also no systematic learning of promotional event performance.
Description of Prior Art
United States Patent Application Publication 2005/0149414 (Jul. 7, 2005, Schrodt) titled “RFID System And Method For Managing Out-Of-Stock Items,” discloses a system for providing product information in a supply chain to a consumer. Schrodt makes use of RFID tags on each distinct product, RFID readers located within or near display shelves, and a customer interface. When a distinct product is out-of-stock, the consumer is provided with information about whether the distinct product is in the backroom. The consumer can also be provided incentives to wait for the distinct product or to return later when the product is in stock.
U.S. Pat. No. 7,021,535 (Apr. 4, 2006, Overhultz) titled “Advertising Compliance Monitoring System” discloses a method for remotely monitoring compliance of an advertising system by determining presence of signs at predetermined locations using RFID tags. Overhultz provides a system to ensure that advertising programs that display one or more advertising signs or marketing materials, such as freestanding advertisements at gas stations, are in fact being posted.
International Patent Application Publication WO11995/030201 (Nov. 9, 1995, Scroggie) titled “Method And Apparatus For Real-Time Tracking Of Retail Sales Of Selected Products,” discloses a method for generating sales reports of selected items. Scroggie focuses on processing sales data quickly for performance analysis and inventory control. Scroggie maintains a database of retail sales transactions captured from retail store computer data. Data for sales transactions are transmitted to a data processing site for generating sales reports on selected items.
U.S. Pat. No. 7,136,832 (Nov. 14, 2006, Li) titled “Supply Chain Visibility For Real-Time Tracking Of Goods” discloses a method for real-time tracking of goods in a supply chain using radio frequency identifiers. The method teaches compensating for missed reads using current read data and data from a previous read. Collected supply chain data is then sold to supply chain users based on the number of goods tracked.
None of the above provides a method of detecting incorrect placement of promotional displays, promotional event out-of-stock conditions, and a method of dynamic scripting to automatically and frequently adjust sales forecast data and replenishment plans. None of the above provides a method of detecting out-of-stock conditions for retail products and promotions based on RFID data, and dynamically updating product supply plans, updating sales forecasts or alerting of such conditions. None of the above provides a method of dynamically optimizing planograms and product displays based on RFID, point-of-sale, and perpetual inventory data.